How crypto.com Makes Money? Business Model Revealed

Welcome its denome, in this video I will show you exactly what is crypto.com business model and how they make money because it was clear to me after making a few videos about crypto.com and later team and All the background stuff and how sustainable they are through AMAs that you guys still had a lot of questions Mainly you guys wanted to know how do they exactly make money? And what is their finance is? How can they be profitable? So for this video I found everything I could about them from the internet But they say that they do not publish any Earnings and they do not publish a balance sheet because they think themselves as Amazon in their early days Who didn't provide any detailed breakdowns of their balance sheet Because Amazon they were able to work without competition for seven years and build their business Basically in secret and then they became this massive giant and they look up to Amazon in this regard That's why they don't want to publish this information.

So I'm actually doing a disservice making this video and Revealing their secrets but anybody who is doing research Were able to find the same things. I just may combine it into this short video So I hope you appreciate this, hit the like button and subscribe to this channel as well. But let's just get started So first, what is exactly their business? So their vision is to bring cryptocurrency to every wallet, right? And to do that I found that they are doing actually six different business ventures So the first is token sales of MCO and CRO, they have the mobile app where you can buy and sell crypto Then they have the Visa card Then they have the Exchange then they have the Borrow/Lend platform with the Crypto Credit and the Crypto Earn and Then they have the merchant or the crypto pay service as well and any one of these areas could be a business on their own and you can you know Crypto exchanges make a lot of money in Currently already.

So if they only had the exchange it would be massively profitable already but they combine all of this together to get the economics of scale which basically means that if they have a Customer and they get money squeezed out of them through all these different places Then they can have lower margins Which is good for the customer as well and everything is easily ready in one place so but also it means that some of these areas may be profitable and some of these areas may be unprofitable and I I think a lot of these are currently unprofitable as well. But let's just take a look at token sales first I think this is the most important thing and this is the most interesting part as well So let's take a look at MCO first. It's a little bit more boring The more important part is when we get to see a row actually but I think this is important as well because it was their first coin and according to the white paper it is used for the visa cards so you can get The annual return on it the cash backs and other perks you can use it for Crypto Invest, Crypto Credit and Crypto Earn so you get better rates if you hold MCO And their plan was also to use MCO as their driver for the crypto.com app But actually if you look at reality, this is mostly funded with the CRO actually So this use case was actually put into CRO I think So four out of five plans for MCO have been implemented And if we take a look at the stats You can see the initial coin offering was 2017 and they raised $26,7 million in capital So this was a good boost for their business in the early days so they get a head start and the total supply of MCO is 31 million and the circulating supplies exactly 50% of that so This circulating supply is actually lower than Bitcoin actually and you can use it for card staking, cash back, perks and bonus interest they were also giving out CRO airdrops 2019, but it was then taken out and some concerns that people had with MCO it's mostly recently that I saw is that why the price hasn't gone up and I was Looking into it and I found that that mostly is People who have been affected by the pandemic situation and they have been having to sell the MCO Because when you stake the MCO on your card, you have to stake it for six months and then you can take out the MCL afterwards So I think a lot of people have actually sold the MCO from that and then we had wire card news Which is the latest news which Affected crypto.com because a wire card basically made us two billion dollar fraud And because it's an issuer for the crypto to come cause people were afraid that it will affect their funds But actually corrupted crypto calm customers were not affected by this news at all so the customer funds are protected, but I believe it will have a slowdown of the issuing of new cards, so they have to find a new partner for them for the crypto.com cards who will issue the cause I'm sure it is their main priority right now.

So it's just gonna be a small hiccup And then the marketing focus has been on CRO for the last six months so I think that's a big reason why there's a lot of disappointment for MCO and the price of CRO has gone up and the price of MCO has been going steady. So it just creates more disappointment. So people are selling their MCO. I'm not buying MCO at these current prices, but I think MCO is Massively undervalued currently that's why I've been stacking up MCO myself and whenever there's disappointment People are just selling because of the feeling of disappointment so I think this is a good time to buy at least in my opinion and the other concerns people had is how they store MCO and what is the Tokenomics of MCO so I will cover this next So, how do they store MCO? you can actually go to etherscan.io and search for MCO token and then you can go to see who are the biggest token holders.

So as you can see this address here holds the 50% of the supply and this Supply is actually never supposed to be used. It is there to secure the customer funds if anything bad would ever happen so they have it as a backup. So it's basically locked in forever at least for now So it's exactly 50% but then you have these other Addresses here as well. You can see Binance here has two energies that hold a big amount of MCO Bittrex and Huobi which are also exchanges have a great amount of MCO as well But then you have these different addresses here. So let's take a look at what they have So if you take a look at this address here, the last time it was used was 393 days ago and it holds four point seven million MCO So I think this is a cold wallet for MCO or to crypto.com as well.

So they hold these assets as a insurance as well And then there's this address which has 1.7 million MCO It has been used 662 days ago the last time so I think this is another Cold wallet as well. So I think cryptic.com has a little over 5 million. I know a little over 6 million in their cold wallets That's what I think and then there's this address and as you can see here It has a lot more activity in the recent days. So I think this is their hot wallet So this wallet is used for the customer wallets. That's what I believe because if you look at this and the growth of this wallet has gone up, but now people have been selling from this wallet that's what I think but it could be staking wallet as well. I think it's the wallet where they hold customer funds Could be staking would be for the casual funds.

But as you can see there's a few big drops here but that's what I think It's useful and then there's these addresses here as well which are big holders if you take a look at this, you can see that the Chart here. This one has been steadily accruing interest and it has gained more MCO during these times then there's this address which is doing pretty much the same and then there's this address and then there's this weird one. And this you can see this one was released June 2020 So this is only like a week or two old address and it already has 488.000 MCO and I don't know what it is useful and this address here is actually used for buying as moving MCO between Binance and And the crypto.com this address.

I don't know what it is Maybe it's the founder address and then they will give it away later on I'm not exactly sure what this is for but we can see that they are not using this much funds and this one could be a big holder because it has been selling a little bit but it's not receiving interest according to this charge because the movements are very Like spiky so I don't know exactly what this is useful But it's not used for staking I can say that based on these movements And then we can take a look at the crypto.com MCO addresses.

So the total number of MCO addresses is it's a little over 120,000 and it steadily growing and it has grown faster during these last few months But when they say that they have two million users only 120,000 at a little over have an MCO address in the Ethereum blockchain so that's a thing to note as well and if you look at active addresses any given day As of now they only about 466 active addresses of MCO and it has been growing Since the CRO cards have been released So I'm expecting this to be growing steadily also in the future, but this number is very very low in my opinion I don't know why it's that low.

It made me question the legitimacy of this information as well as the number it seems way too low in my opinion but uh, it could be true But only 466 active addresses per day is still low in my opinion a lot of room to grow as well And then we can take a look at the top 1% of addresses how much MCO they hold of the total supply and you can see that the top 1% is actually selling off their holdings or the holding have been withdrawn from those addresses and then we can take a look at the balance on Exchanges so we can see that the balance on exchanges has actually been growing so exchanges have been stacking on MCO lately So that Tokenomics of MCO is that whenever they give MCO as a perk crypto.com actually has to buy it back from the market.

So this is a cost for crypto.com in my opinion I believe so because there's no more MCO added in the system. So only way to get the MCO back is by buying it So when they give it out a staking reward or as a perk or cash back they have to buy it back using their money But then let's take a look at CRO because this is the most interesting part and when I show you this then you will be like "oh okay, now I get it" So CRO actually had no ICO and the total supply is 100 billion But the circulating supply is only 17,7% so that means that 82,3% of the total supply has not been released yet. And you can use it for staking, for the syndicates and if you want to make the maximum amount of profit with CRO You can use the minimax strategy to get 30% to 40% interest per year on your CRO and I've made videos about this before.

So if you want to use this strategy with CRO, I highly suggest you watch my previous videos on that But CRO can also be used as a Merc in the Merchant Gateway to buy things on the crypto.com and they will have their own chain in the future as well. And if you go to their white paper you can see the use case for CRO but they actually announced after their white paper that they will freeze some of these assets so 40% of these assets the long-term incentive wallet and the reserve wallet will be frozen for three years until the end of 2022 so 40% will be frozen until them and 20% which is the ecosystem grants will be frozen until main net launch Which is supposed to come later this year so that will be another 20% that is locked until the end of this year or if there's some delay until next year.

So about 40% this Community Development token fund and the secondary distribution launch incentives are coming to the supply so currently they have what 17,7 billion CRO so about 23 billion still coming out of these ones And we can take a look at Community Development token what it is useful. So one of their AMAs they said here that CRO community funds will be used For all of the competitions and all of the giveaways so their plan according to AMA was to go local this year, uh, the crypto.com so as you have seen They now have a telegram group for almost every country or continent. So they have a telegram group for all seas, they have a telegram group for Nordic countries for Brazil and for other countries as well France They have their own telegram and they have these giveaways Inside those telegrams and inside Twitter as well and all of this is paid from these tokens So crypto.com doesn't have to pay anything for them because it's coming from the supply which is just coming to their wallet So that's interesting and the second there is this distribution and launch incentive fund According to their white paper.

This is the release schedule So during the first year They will receive 10% of this fund and the second year 8% will come out and then 6%, 4%, 2% So the inflation from this fund is going lower and lower and lower So during the first five years they can use this for the early adopters. So if we take a look at this actually so total supply of CRO is steadily going up and the current supply is close to 18 billion like I showed before So you can see here. It's 17,7 billion and they get this money on their Address CRO is another ERC-20 token for now before that main net is launched so you can go to this address and see that every single day, you can see that every single day they are getting about 21,9 million CRO added to their wallet and this is free money again that they get on their wallet according to their white paper.

And I think it's a well, well some people say this is a bad thing, this is like a fraud and this is a Ponzi scheme. I think it's brilliant marketing Because now they have secured their own funds for the next five years from this one so they can do anything they want with that money and You can see while I already showing you this, but if you actually take a look on the third page here What they are using these funds you can see that 48 days ago They transferred a lot of money in 200.00 CRO increments to this wallet and if we take a look at what this wallet is according to Ether Scan you can see that this wallet is actually who will be so they are selling CRO to exchanges and another I found was OKEx 48 days ago and you can also see that OKEx funds 253 days ago as well So they are selling CRO to exchanges which is massively profitable because they haven't had to pay anything for the CRO It's just coming to their wallet and they can sell it to exchange it whenever they want or need they can give it to early adopters like myself with Sierra staking and the syndicate as well so now you know that they are getting a lot of free money and if the total supply for CRO is 100 billion CRO and there's only 17 billion here currently there's still 80 billion that is coming to their wallets.

So the total market cap for Sierra currently for the circulating supply is more than 2 billion now. So the total value is more than 10 billion that they currently hold So that they still hold a lot of money So people who think that CRO is not profitable you are wrong So according the white paper, they get this money and they get sell it they can give it out They can do whatever they want with that money So they are massively profitable From token sales alone and they still have these different areas and I believe these different areas are not making money maybe exchange is making money, but the other ones are probably unprofitable and but token sales are so profitable they're getting basically billions of dollars for free because they get them from the from the total supply on their account, so this is so profitable that these other ones they can just invest as much money and the incentives can be ridiculous for as long as they want because this one is so profitable alone but let's just take a look at the app and the business structure for these what it is now and what it can be as well So the app you can buy and sell cryptos and gift cards on the app and there's no fees when you buy and sell cryptos but I think they profit from the spread because the price on the app is not exactly a one-to-one ratio when you would go to an exchange so I think whenever you buy and sell crypto on the app, they will get like a Institution discounts whenever they buy it back from another exchange, so they make a little bit money from the spread that you Buy and sell on the app So that's I think they make money there and also on the app Their idea is to send a portion of the orders to their exchange But they want to increase the amount of the orders on their own exchange to make it more profitable as well and they want to have their exchange to have more liquidity and they want to bring retail traffic and institutional traffic on their exchange and on the app as well.

So you could see everything on the app and they want to allow you to buy Bitcoin or other cryptos with recurring purchases as well in the future. So that means if you go to coinbase you can buy Set to buy Bitcoin Let's say every day $5 or every week with $5 or $5 every month or whatever you want so you can do like a dollar cost average strategy, so they want to do that as well on the app, which will be massively profitable as well.

And then they have the card and I think this card is the only one that isn't massively Unprofitable, but it is used for customer acquisition for their system as well But they have some fees on the card currently, which is the replacement card account closure and caught upgrade So these costs a little bit money, but I think they lose a lot of money on the card ecosystem but there's also the upside so these whenever you use a Visa or a card on a On a shop or a merchant or online shop There's a processing fee that the merchant has to pay. So if you pay/give up merchants like $100 They will only get 98 dollars and 2% will go to Visa and some of that money is Shared with the issuers of the cards so crypto.com actually gets a little bit money from Visa from these processing fees, but they give cash back to 3%, 4%, or 5% So I think this is massively unprofitable but what they can do is whenever you have funds on their ecosystem they can use those funds to get the loans or they can use that money as leverage for their other loans as well because they hold that asset as a collateral as well, so it is not like whenever you have a big company, there's these different gimmicks that you can do with your company to Play around with your holdings or your assets.

So Giving out loans to institutions or to retail people is massively profitable So whenever you hold funds on the crypto.com ecosystem they can use that funds use those funds for other things as well and we'll get more into this when we go to the Crypto Earn section and read the Terms of Service as well. And the exchange we know that exchanges are massively profitable because of the fees as well as They get the market price, but for whatever purchase they make because they own the exchange as well So they have retail and institutional traders on the exchange and margin trading is coming up in the exchange as well It's the plan is to come to come this year and when they have margin trading whenever you have funds on the Earn plans, so if you put Bitcoin on the Earn plan they can use that money to allow leverage training with high liquidity So they will have basically borrow your Earn funds on the Margin Trading for the margin traders so currently the Earn funds are not making money on margin trading but in the future they can make money from the funds that you have on the on the Earn section for the people who want to use leverage on the market margin trading so this one will be massively massively profitable as we know and when they combine it with the earned and they will have What they they called not to sue syncronicity the collaboration with these two different platforms so that they support each other then they have the syndicates here and people are like How can they give out 50% discount for Bitcoin or engine or ADA or other coins? and they think that they are the cryptic.com has to pay for that money which is not true at all because I think syndicates are not unprofitable at all.

I don't think so. And the reason is if you take a look at engine listing event. It is a listing event, so the coin is listed on their exchange so they give out a bit discount but whenever you list a coin on an exchange, there's something called listing fee, so the project actually has to pay the exchange to have their coin listed on the exchange most of the time and I believe that's the case with crypto.com as well they just decide to not take the money for themselves but to distribute it to the customers as well and to drive the price of CRO up because as we noticed before they have an incentive to drive the price of CRO up, right? Because the higher the price of CRO is they will get the free air drops for CRO so they can use the CRO for these giveaways and all these stuff so they have an incentive to drive the price of CRO up and they can do it through the syndicate So if they syndicate allocation is 500 million, but they get billions of dollars worth of CRO and their accounts this it's just like a tiny tiny drop even if they had to pay something for this listing event, and they do all these listing events with collaboration with the project owners as well.

So I think the project owners are highly involved and they want the listing event to be a success as well so they can drive the price of the their coin up as well. And for the listing fees Jared Tate who is the founder of Digibyte actually claimed that Binance won the $300,000 as DGB when they list the DGB on their Exchange, that's why Binance took so much time to list the token on their exchange, of course Binance claim that this never happened, but as a public announcement you can see that there is a listing fee whenever a coin is listed on Binance because they now say that from now on since 2018 every listing event will be The fund will be added to their foundation which is a charity foundation, and of course we could debate how charities actually work and how charities can actually make money for the founders of the charity So this a lot of loopholes in this one but I will not go into that in this video, but charities typically are not really that charitable.

They're typically also making money for the people who are holding these charities as well but anyway, there is a listing fee and I believe that's the case with crypto.com as well so I believe this is massively profitable and not on the profitable at all for crypto.com they can drive the price up and also they will not pay retail price for this event, or they get a lot of the coins for free as well. And next the Borrow/Lend platform.

So the Crypto Earn and the Crypto Credit, the Crypto Earn they can use that money to lend money to retail Retail investors they can lend the money to institutions and they can trade your money also, according to their Terms of Service and Crypto Credit is quite self-explanatory When you take out the loan, you have to pay interest of crypto.com So these things work together and the earn can be used for the market margin trading in the future as well and if you take a look at the terms and conditions You can see here that you whenever you accept the terms you understand and agree that during the Earn Term crypto.com may hold or convert the Principal into any other cryptocurrency for their investment purposes, which may include making of loans. So from here, you know that your money is used for to make more money. So whenever they pay out like our 8% for stable coins or 12% for stable stable coins or 6,5% for Bitcoin they will be using that money for their investment purposes as well.

And you always have to accept these terms and services also Crypto Earn is not protected by any insurance So they have an insurance worth of 360 million for customer funds on their platform, but Crypto Earn is not in that insurance according to their Terms of Service at least and then you have to use Wallet app and Crypto Earn at your own risk. So they basically say that whatever you have on the platform is not our fault. Of course if they lose the money then somebody will sue them and they will probably lose but this is just according to their terms and service so they will use your customer funds for investment purposes And then they have the merchant service and this is a big and growing market as well, and what it means is that you can that merchants can implement accepting crypto payments with crypto.com ecosystem So Travala, WooCommerce and Ledger is already using this and also I think unstoppable domains it's also using this so when you go to their website You can pay with CRO or Bitcoin or Etherium with their service and it's for the merchants. You can read terms of services, but it's quite lucrative and it's quite good for them as well.

And just yesterday or the day before they announced that the crypto.com Pay Checkout is now available for open charged merchants, which allows over 900,000 OpenCart online shops to use and accept crypto payments. So this is a massively bullish for CRO as well. And it doesn't mean they have to implement it But they can, and they have an incentive that whenever I shop implements crypto payments It is free for the first six months and they can accept Bitcoin, Ethereum.

I think Litecoin was there, so well and CRO and some other coins as well. So this is coming up and this is massively bullish as well for the adoption of crypto. And then you can go to their AMA again and Crypto.com Pay has three things they have the merchant service, gift card business and the ability to send money to each other and they are planning to have another payment platform called Magento and this is again a big big company that allows payments online. It is an old-school payment system I used it when I was working in an e-commerce company before and a lot of e-commerce shops actually use Magento as their Shop platform and they want to use it in a way that it is automatically added to merchants.

So that's a interesting interesting thing and they already had a large branch with travel and Gift cards they are expanding they want to have gaming-related brands. They also want to add it in local areas. So gaming-related brands probably placed this and then Xbox would come to mind at first so that's coming up and you can earn rewards in CRO, and also, there will be a lot of development on Crypto.com Pay and it's a long term play for them. So this platform even though it sounds boring. It's gonna be a big one for them and if you take a look at the roadmap for the coming years, you can see that they already issued these things from their most recent platform but there's Margin trading, Derivative trading coming up already, Counter trading coming up, these are decentralized token swaps and then you will have something called Card Credit Power which basically means that you can get leverage leverage credit with your card in the future and then there's De-Fi borrowing and lending on the non-custodial wallet Latin America is coming up large merchants on the Cryptic.com Pay, Chain Mainnet and in the cryptic.com and further advancement at what advancements as well and now is the company already in green and they say their plan is to have a profitable year in 2020 and they are on track and I don't doubt them just based on what's happening with CRO, but they see say here that they see a lot of opportunity to invest in areas they want to invest and they're growing double digits every month and they intend to invest aggressively for their for their future.

But they want to have the flexibility to switch Profitability on and off and I don't doubt them based on what's happening with CRO that they cannot do it And let's there's one more here or a few more slides. The ecosystem the Crypto.com Pay they say it's one of their key products for 2021. So that's important so you could use Xero for more and more places and get the cash backs as well and the payment system is their acquisition Channel so the card and the crypto.com Pay is their customer acquisition channel But trading is currently when most money is made. So the exchange is the biggest money maker for crypto.com as well as this will be replaced by lending. So lending service will be a bigger market they think in 2021 and 2022. So all in all they are involved in all these different aspects and some of these are unprofitable now But they're making all of this together into a profitable Ecosystem in the future and I myself believe in theirs ecosystem.

That's why I'm invested in both CRO and MCO and if you want to get started with this you can actually Install their app with Google Play or App Store click Add Referral code, type this code in and you will see this pop up and after you've seen that the code has been activated and when you stay 50 MCO or more and get the ruby red card or higher tier card, you will instantly get $50 back whenever you use this code and take the 50 MCO or more. and if you have any questions or comments about this video if you like this video I would appreciate if you can put a comment down in the comment section, like this video and if you want me to do more deep dive research into other crypto projects and other passive income making opportunities subscribe to this channel for more as well Thanks for watching and I will see you on the next video.

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